UK car manufacturing outputs fell 21 per cent in July despite nearly all factories in the country being open throughout the month.
Just 85,696 new models left vehicle plants last month, which is 22,543 fewer than in July 2019, official figures have revealed today.
The trade body said the month had seen the ‘ramp up of production continue’, however, social distancing measures in factories and ongoing global economic uncertainties had ‘stifled output’.
‘Stifled output’: UK car manufacturing fell by 21% in July, industry figures revealed today, caused by the global dip in demand for new cars and factories being restricted by the enforcement of social distancing measures
With almost all UK car showrooms open throughout July and registrations of new models rising by 11 per cent in the month, there were hopes of a bounce back in fortunes for UK car makers following the coronavirus pandemic.
However, the latest decline means total vehicle production is down by 40 per cent in 2020 with another turbulent five months remaining.
By the end of July, UK output stood at 467,053 units – some 308,000 short of the same point 12 months earlier, which the Society of Motor Manufacturers and Traders says has resulted in more than 11,000 job loses in the sector already this year.
The latest manufacturer to make staff cuts is BMW, which has announced 400 job losses at the Mini factory in Cowley, Oxford, from next month.
In a statement, it said this was due to fall in demand for new cars caused by the Covid-19 crisis, which has forced it to reduce its shift pattern from three to two from October, with almost half of its agency staff being let go as a result.
Slump: The dramatic fall in vehicle outputs in July is showcased in this graph releases this morning by the SMMT
Mini UK announced yesterday that it is to cut 400 agency jobs at its factory in Oxford due to the fall in demand for new cars caused by the coronavirus pandemic
BMW bosses said the Cowley factory would reduce shifts to two from three after reviewing its estimated output for the year with new car sales shrinking across major economies
The SMMT’s figures showed that UK production for the home market improved compared with May and June, however, it still fell by a ‘dramatic’ 37 per cent year-on-year, with just 13,434 units leaving factory gates.
Outputs for export, which accounts for more than four in five new cars produced in the UK, also fell, but by a slightly less substantial 17 per cent to total 72,262 units.
Overseas shipments in the first seven months are now down by two fifths (381,273 fewer cars), despite lockdown measures easing around the world.
Mike Hawes, chief executive at the UK motor trade body, said July numbers were a ‘marked improvement on the previous three months’.
However, he warned that the outlook for vehicle manufacturing in this country remained ‘deeply uncertain’.
More than four in five new cars that leave UK factories are built for foreign markets. The sector is heavily reliant on demand from overseas
In a statement issued today, the SMMT boss again called for the government to accelerate talks to find a trade-free agreement with the EU for 2021.
As it stands, a 10 per cent tariff on the export and import of new cars in and out of the UK will not only impact the price of British built vehicles on foreign soil, but also make the average new model built in EU nations some £1,500 more expensive for UK consumers.
‘With the sector now battling economic recession as well as a global pandemic, it has neither the time nor capacity to deal with the further shock of a ‘no deal’ Brexit,’ Hawes said.
‘The impact of tariffs on the sector and the hundreds of thousands of livelihoods it supports would be devastating, so we need negotiators on both sides to pull out all of the stops to ensure a comprehensive free trade deal is agreed and in place before the end of 2020.’
Andrew Burn, KPMG’s head of automotive, took a more positive outlook on the latest figures, saying production being at around 80 per cent of last year’s volumes is an achievement given the extended period of uncertainty caused by coronavirus.
‘Whilst it’s great for car manufacturers who serve a global market, with around 80 per cent of vehicles manufactured in the UK for export, we cannot forget that at a domestic level there are a number of challenges,’ he said.
‘Many manufacturers of components are highly operationally geared and therefore in many cases, small changes in volumes mean the impact is felt on the bottom line more directly than in other sectors.
‘Also, given that the UK was the hardest hit economically, out of major economies, by the pandemic in the three months to June, a longer recovery time for many sectors is to be expected.’
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